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30 Mar

How to Get Through Tough Economic Times – COVID-19 edition

Challenging Times

Posted by: Garth Chapman

Why this is such a big deal that requires your full attention?

Because in just two months the COVID-19 pandemic has already become:

  • The single largest economic disruption and jobs crisis since the great depression
  • The most concentrated national efforts against a crisis since World War 11 since the Great Depression of the 1030’s
  • All of which is being driven by the biggest health emergency the world has seen since the Spanish Flu epidemic of 1918-1919.
  • This ain’t going away anytime soon.

The good news is that the Federal and Provincial governments along with municipalities across Canada have decided to throw everything we have at this. The federal government has made it clear they will spare no expense or effort to get us through this intact. Good on them.  Now it’s up to us to follow that model. We must do what needs to be done to keep our households and our businesses intact. We will have a vaccine within 12 months according to Bill Gates (look up what he and Melinda are doing on the medical front around the world).  So by sometime in 2021 we will be in recovery mode, and will likely enjoy a boom like we haven’t seen in decades (in most but perhaps not all markets).  So we need to bridge ourselves to that time of recovery.

So what are we to do?

Cash is King, so preserve your cash as best you can. Take all available payment and other deferrals that you can get. Preserve available capital in your HELOCs and PLC’s.

Protect yourself in all your income and debt management decisions, and whatever you do, do it as fast as you can reasonably do it, and based on your risk tolerance. The less tolerance you have the more protective you should be.

Read more on my recommendations as to how to protect yourself in my Blog Post What Direction are Interest Rates Headed, and what should we do?

What is Your Burn Rate?

Are you cash-flow positive or break-even, or negative?  If negative, what is your Burn Rate?  The term essentially means ‘by how much does your cash outflows exceed your inflows?’  For this exercise I recommend you assume all spending is not funded by lines of credit or credit cards etc.  So do your monthly or annual budget in this manner to determine if you have a ‘burn’ or not.  And if you do, you need to act to minimize the burn rate as best you can.  Cut spending, increase income if you can, look for debt payment deferrals, and if that is not enough, then look to other debt instruments to help or sell assets.

Now, let’s get down to the basics:

How to make a Budget (this is pretty complete)

So first, we need to take stock of our financial situation, and that means reviewing, or making, a household Budget. Below are 5 good products to help with that.  If you would like further advice or help with this send me an email and I will be happy to assist you.  After all, I’m a numbers guy 🙂

Here are 4 Household Budgeting Apps & Programs

MvelopesFREE VERSION is full featured online personal finance App based on the age-old envelope budgeting method, where you put your cash in envelopes, each marked to what the cash is for, and when it is gone, it is gone, resetting during the start of your next pay period.

You Need a Budget (YNAB) – $6.99 / month USD – packs in many features and improvements over earlier versions, and it intuitively teaches some solid budgeting practices.

Quicken – has 4 versions at varying costs Best for Those Who “Want It All”

The Below are Spreadsheet solutions:

Vertex42 – FREE – a great variety of Excel Spreadsheet based products. All the Vertex42™ budget templates can be downloaded for personal use and no charge.  See their household budget spreadsheet here

More Vertex42 Family Budget Planner Spreadsheets

5 Tips for Surviving Economic Uncertainty

from Money Coaches Canada

  1. Figure out how much you need to cover your expenses
  2. Develop new Cash Saving Habits
  3. Build Your Emergency Fund
  4. Remind yourself why you invested, not on what’s happening in the markets now
  5. Get Support (on the many federal and provincial initiatives to assist Canadians)

Also from Money Coaches Canada

Cash Flow in the Time of COVID-19


I saved the Best for Last

All the Support Programs available all across Canada

This is a great open-source document detailing, searchable, and categorized by need and situation. Brilliantly conceived. Updated frequently.